by Jorge L. Forment, President and CEO, United Americas Bank

Customers come from as far as 30 miles away to do their banking with United Americas Bank, NA (UAB) – Banco Unido – in suburban Atlanta, because the bank offers them something they can’t find anywhere else – the feeling that they’re at home. Home, in this case, is Latin America.

UAB opened in 1999, to tap an unfilled market niche in Atlanta, Georgia, offering banking products to Hispanic businesses and consumers in its predominately Latino service area. Our bilingual staff speaks the language of Latin countries and understands the subtle cultural differences in those lands due to their staff which consists of employees from 12 different countries.

People come to UAB because they find it more comfortable to communicate with its employees than with tellers in English-speaking banks. We can explain things so they understand. They come in, socialize, and conduct their banking business, and many of the customers will bring their children, especially on the weekend. It is a major outing to the bank and the other shops – it is a family affair.

Formed by a group of prominent Hispanic entrepreneurs, UAB serves a continually expanding Latino population in the Greater Atlanta area. Many members of this group moved from California, Texas and Mexico to Atlanta to work in jobs related to the 1996 Olympics and never went home.

Between 1990 and 2000, Georgia’s Latino population tripled and today, the four counties surrounding Atlanta – Gwinnett, DeKalb, Cobb and Fulton – are home to about 65 percent of the state’s Hispanic population, according to the U.S. Census Bureau. The Georgia Hispanic Chamber of Commerce estimates that 1.2 million Latinos reside in Georgia owning 13,000 businesses.

Humble Beginnings

The planning for UAB took place in the basement of one of the organizer’s home, furnished with two computers and two folding tables. After receiving preliminary approval for a national bank charter, UAB offered its stock to the public, selling $12 million in shares in only 48 days.

Today, UAB’s typical depositor is a blue collar, lower-income wage earner whose primary language is Spanish. About 65 percent of UAB’s customers are Mexican-American. Its customer base reflects Atlanta’s appeal to immigrants from Mexico, Colombia, Venezuela, Puerto Rico, Cuba, the Dominican Republic, and many other South and Central American countries.

In addition to its main office in Atlanta, UAB has two stand-alone branches, located in Dekalb and Cobb counties. Two of the bank’s branches are open seven days a week to meet the needs of its customers.

Cultural Challenges

Our customers’ cultural and socioeconomic profiles contribute to the bank’s biggest challenge – the ability to raise core deposits. UAB has many accounts with relatively low balances, and a customer base that routinely sends half its paycheck to relatives living outside the United States.

Persuading Latinos to trust United States banks is important in UAB’s marketing strategy. Immigrants who have recently been introduced to the banking system through first-time accounts hold approximately 15 percent of the bank’s deposit accounts. In some of the countries from which immigrants come, credit is frowned upon. Banks sometimes shut down without notice. Moreover, in the rural areas of those countries, there may not be any banks.

Many immigrants believe that if they must suddenly leave the United States, they will lose any money they have in the bank. UAB strives to explain the safety of United States banks and assures customers that if they’re forced to exit the country suddenly, the bank can, and will, send their money anywhere in the world.

The bank also emphasizes the safety of depositing money in the bank, and warns Latinos that it is unwise to carry all their money in cash. Hispanics are routinely targeted for assaults, and robberies, because of their cultural practice of carrying large amounts of cash.

Bank employees offer consumer seminars on topics, such as how to open a bank account, how to start a business, and how to buy a home. The bank reaches out to business people through the Georgia Hispanic Chamber of Commerce, the Latin American Association, and Georgia’s Mexican American Business Chamber.

To reach the unbanked, UAB developed a Spanish-language television commercial, “The Mattress Bank”, that was a spoof on putting one’s money under the mattress (see advertisement, above). In addition to television ads, UAB has also advertised in Spanish-language periodicals (Atlanta has nearly two dozen) and on Latino radio programs. The bank’s posters sum up the advantages of using UAB: Free! Money Transfers; Check Cashing; Notary Public. Still, the bank’s most effective marketing tool is one that costs nothing: word of mouth.

The Special Touch

While UAB’s biggest challenge is education, especially of laborers, the bank also serves many professionals coming from the countries that comprise its customer base. For that customer base, banking is an every-day occurrence, but one that is more pleasant when transacted with someone who speaks the language and understands the culture. We offer the same products as offered by other community banks. However, we separate ourselves from the competition by the level of service, the personal response we give to the customer and, most importantly, the language and cultural knowledge.

Consumer Products

The bank has created several products designed specifically to fill the needs of Latino customers, including an ATM product, secured credit cards, mortgages, and small business loans.

The ATM account, opened with as little as $100, carries a $10 monthly fee, allows customers to avoid the cost of out-of-country electronic remittances, and offers a more favorable exchange rate than local money exchanges offer. With this product, the customer opens a deposit account and receives an extra ATM card that is sent to a relative in the home country. The relative then uses the ATM card to withdraw the funds in the home country.

UAB’s secured credit card is often a customer’s first step in establishing American credit. Since many customers do not have traditional credit, the customer normally uses a savings account to guarantee the credit card limit. A typical secured credit card customer at UAB has a line of $500 to $1,000. Delinquencies are quite rare – the bank has had to close an account only a few times since it began offering the product in 2001.

The bank’s mortgage product incorporates non-traditional credit criteria and makes credit judgments based on income and the borrower’s history in making timely utility, telecom and other recurring payments. In addition, the borrower must have filed at least two years’ past Internal Revenue Service tax returns. Borrowers must also attend a first-time homebuyer education program.

Despite the use of non-traditional credit histories and a willingness to accept household income based on the earnings of multiple adults, UAB’s loan losses have been negligible. In the more than five years that UAB has been originating these mortgages, the bank experienced losses of less than two-tenths of one percent on a $65 million mortgage loan portfolio.

Business Products

In the business community, UAB works to bridge the gap between its customers’ entrepreneurial spirit and American market requirements for record keeping and accounting. Latinos work hard and know how to run their businesses, but many are not used to organizing their paperwork in the American way.

While we are a bank serving the Hispanic market, we are first and foremost a national bank offering a full array of business banking products to our customers. The bank offers business checking, corporate checking, business NOW accounts (for sole-proprietors and nonprofits) and a money market account.

In addition, UAB offers commercial real estate loans to businesses for acquisition or construction of office, retail, industrial, warehouse or multifamily properties. These 80 percent loan-to-value (LTV) loans typically amortize over 20 years with term financing periods of 5 or 7 years during which the interest rate can be fixed or adjustable.

Businesses in need of working capital also come to UAB, which provides commercial loans to carry inventory and or/accounts receivable, to fund expansions or to purchase additional equipment. The bank typically looks to the company’s real estate as collateral for the loan. UAB also provides floating rate residential home construction loans to homebuilders with good credit history.

Compliance Challenges

We examined our other lines of business, paying increased attention to compliance with anti-money laundering and the Bank Secrecy Act (BSA) regulations. We also considered our business with a number of small grocery stores that sell phone cards and cash checks. Because of the additional resources necessary to monitor this type of business, we determined that we could no longer service certain accounts.

While our product line is similar to those offered by other community banks, UAB’s approach to business is unique. Many banks today offer bilingual customer service, but few realize the subtle cultural differences among those who share the Spanish language as a native tongue. Employees from a dozen different Spanish-speaking countries ensure that UAB is up to the task now and in the years ahead.